SEBI UPDATE: DOCUMENT REPOSITORY FOR PROMOTING DUE DILIGENCE
SEBI vide a circular dated 5 December 2024 (Circular) has directed the Stock Exchanges (Exchanges) to set up an Online Repository Platform (Repository) for the Merchant Bankers (“MBs”) to facilitate easier access to documents in the course of their Due Diligence exercise in the public issue process.
Key Update:
The Exchanges are now required to maintain a Repository for the MBs to upload their documents electronically. The MBs shall then upload the documents on this Repository for efficient management of records.
The MBs are required to upload their documents on the Repository of any of the Exchanges. Further, the MBs shall also intimate the same to the other Exchanges where the securities of the issuer company are proposed to be listed.
Documents to be Uploaded:
The Exchanges shall inform the MBs on the list of documents to be uploaded on the Repository, which has been prepared in consultation with the Association of Investment Bankers of India (AIBI).
Mandatory Timelines:
The Circular provides a mandatory timeline to be adhered by the MBs in uploading the documents on the Repository, which is as follows:
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Who can Access the uploaded documents?
The documents uploaded by the MBs can be accessed by the respective MBs only, through their individual login credentials. However, MBs shall make such documents available to SEBI for the purpose of their supervisory functions.
MHCO Comment:
The MBs are under an obligation to maintain the documents and records pertaining to Due Diligence in both pre- issue and post- issue activities of the Issue Management by the SEBI
(Merchant Bankers) Regulations, 1992. Further, these documents are required to be preserved for a minimum period of 5 years.
The Repository will be of great aid for the MBs in their Due Diligence exercise. This is in furtherance of promoting and protecting the interests of the retail investors. Given the proactive role played by the SEBI in creating a transparent ecosystem in the capital markets, the Repository shall play a beneficial role for the Regulator as well as the MBs and issuers.
The views expressed in this update are personal and should not be construed as any legal advice. Please contact us for any assistance.